Correlation Between NSTAR and Western Digital
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By analyzing existing cross correlation between NSTAR ELEC 44 and Western Digital, you can compare the effects of market volatilities on NSTAR and Western Digital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NSTAR with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSTAR and Western Digital.
Diversification Opportunities for NSTAR and Western Digital
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NSTAR and Western is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NSTAR ELEC 44 and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and NSTAR is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NSTAR ELEC 44 are associated (or correlated) with Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of NSTAR i.e., NSTAR and Western Digital go up and down completely randomly.
Pair Corralation between NSTAR and Western Digital
Assuming the 90 days trading horizon NSTAR ELEC 44 is expected to generate 0.4 times more return on investment than Western Digital. However, NSTAR ELEC 44 is 2.52 times less risky than Western Digital. It trades about 0.04 of its potential returns per unit of risk. Western Digital is currently generating about 0.01 per unit of risk. If you would invest 8,590 in NSTAR ELEC 44 on September 1, 2024 and sell it today you would earn a total of 174.00 from holding NSTAR ELEC 44 or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 45.24% |
| Values | Daily Returns |
NSTAR ELEC 44 vs. Western Digital
Performance |
| Timeline |
| NSTAR ELEC 44 |
| Western Digital |
NSTAR and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NSTAR and Western Digital
The main advantage of trading using opposite NSTAR and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NSTAR position performs unexpectedly, Western Digital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Western Digital will offset losses from the drop in Western Digital's long position.The idea behind NSTAR ELEC 44 and Western Digital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Western Digital vs. Rigetti Computing | Western Digital vs. D Wave Quantum | Western Digital vs. IONQ Inc | Western Digital vs. Desktop Metal |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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